2023-05-22-莱坊-Abu_Dhabi_Office_Market_Review_Autumn_2022_5页_1mb

Abu Dhabi Office Market Review - Autumn 2022 Summary

Core Content

The Abu Dhabi office market in Autumn 2022 shows resilience in rents despite the challenges posed by the post-pandemic environment. The market is influenced by a favorable economic climate, increased business confidence, and a return of employees to offices, which has led to rising demand for office space across various sectors.

Main Points

• Rental Stability: Office rents in all major submarkets tracked by Knight Frank remained stable during Q3 2022. Capital Centre saw the highest increase, with rents rising by 4.7% over the past 12 months to AED 1,400 psm. The overall increase in rents compared to 2020 is 3.6% for Corniche/Downtown, 11.3% for Capital Centre, and 4.3% for Al Reem Island.

• High Demand for Office Space: The market is experiencing a surge in demand, with the education and media sectors leading the charge. These two sectors account for 50% of the 18,000 sq m of new office demand registered in 2022 so far.

• Occupier Behavior: Businesses are showing increased confidence, and many are expanding or relocating. However, occupiers are still cautious due to previous rental increases, and landlords are hesitant to raise rates, fearing potential downsizing or relocation.

• Supply Constraints: There is a limited supply of Grade A office space, especially in traditional CBD areas. Occupancy levels in ADGM and other high-quality buildings are over 95%, making expansion difficult for new entrants.

• Development Pipeline: The city's development pipeline is limited, with only 95,000 sq m of new supply expected between now and 2025. The majority of this will be on Al Maryah Island (45,000 sq m), while other emerging areas like Al Manyah Island, Al Reem Island, and Al Raha are seeing new developments.

• Flexible Office Demand: Serviced offices continue to be in high demand, especially among new entrants and start-ups, due to their flexibility and shorter lease options.

• Government Initiatives: The Abu Dhabi government is actively promoting the emirate as a global business hub through initiatives such as the Abu Dhabi Residents Office, which aims to simplify residency processes for expatriates, and the Golden Visa and Green Residence Visa, which attract international talent and investors.

Key Sectors Driving Demand

• Education: Dominates with 6,000 sq m of new demand, driven by schools, early learning facilities, and mental health institutions.
• Creative & Media: Accounts for 3,100 sq m of new demand.
• Banking & Finance: Contributes 1,700 sq m.
• Health Services: Adds 1,250 sq m.

Office Demand by Submarket

Government Focus on Global Hub Status

The Abu Dhabi government is working to enhance the emirate's appeal as a global hub by improving the business environment, attracting foreign direct investment (FDI), and supporting talent acquisition. Initiatives such as the Abu Dhabi Residents Office and Golden Visa are key components of this strategy.

Conclusion

The Abu Dhabi office market is showing signs of recovery and resilience, with increasing demand driven by key sectors like education and media. However, the limited supply of high-quality office space and the cautious approach of both occupiers and landlords continue to influence market dynamics. The government's efforts to streamline residency and attract international talent are playing a crucial role in shaping the market's future.

Contacts

• Andrew Love - Partner, Head of ME Capital Markets
  Email: Andrew.Love@me.knightfrank.com
  Phone: +971 50 7779 595

• Stephen Flanagan - Partner, Head of Valuation & Advisory, MENA
  Email: Stephen.Flanagan@me.knightfrank.com
  Phone: +966 55 8866 480

• Felicity Davey-Faun - Associate Partner, Valuation & Advisory
  Email: Felicity.davey-faun@me.knightfrank.com
  Phone: +971506134450

• David Crook - Partner, Head of Abu Dhabi
  Email: David.crook@me.knightfrank.com
  Phone: +971562197389

• Priscilla Goh - Commercial agent, Occupier Strategy and Solutions
  Email: Priscilla.goh@me.knightfrank.com
  Phone: +971 56 4202 313

Research Team

• Faisal Durrani - Partner, Head of Middle East Research
  Email: Faisal.Durrani@me.knightfrank.com
  Phone: +447885997888

• Alaa Aljarousha - Manager, Middle East Research
  Email: Alaa.Aljarousha@me.knightfrank.com
  Phone: +971565489626

• Lubaba Fakieh - Geospatial Analyst
  Email: Lubaba.Fakeih@me.knightfrank.com
  Phone: +966555523659

Recent Publications

• Dubai Office Market Review - Autumn 2022
• The ESG Imperative - 2022
• Abu Dhabi Residential Market Review - Summer 2022

For more research, visit: knightfrank.com/research

Disclaimer

© Knight Frank 2022
This report is for general information only and not to be relied upon in any way. Knight Frank does not accept any responsibility or liability for loss or damage resulting from reliance on this document.
Reproduction of this report in whole or in part is not allowed without prior written approval.